SoftBank Group Corp.
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Vision Fund injected at least $ 400 million into Greensill Capital late last year, according to people familiar with the matter, deepening the potential losses the tech investor faces in the startup’s collapse.
The cash infusion was in addition to the $ 1.5 billion the Vision Fund had invested in Greensill in 2019. The money, which was not previously reported, was used as financial financing when another Vision Fund company was in point of defaulting on a loan to said people.
Greensill, which specializes in granting short-term loans in the style of business advances, filed for bankruptcy this week after regulators took over its banking unit and the Credit Suisse Group. AG
froze the fundamental investment funds for the startup’s operations.
Greensill packaged loans to companies in securities, known as banknotes, which were acquired by Credit Suisse funds and sold to investors as low-risk, money-market-style investments.
SoftBank, founded by billionaire Masayoshi Son, is a giant in the field of investment, with interests spanning microchips, autonomous cars, satellites, e-commerce and mobile phone networks. The $ 100 billion vision fund of the Japanese conglomerate and a smaller successor fund have invested in more than 80 companies. In addition to Greensill, they include Uber Technologies Inc.
and the owner of TikTok ByteDance Ltd.
The $ 400 million was the latest in a long series of complex financial arrangements between the Vision Fund and Greensill. SoftBank is preparing to write its investment to Greensill, the Wall Street Journal reported last week, citing someone familiar with the matter.
In March 2020, when Covid-19 hit the markets, investors withdrew their money from Credit Suisse funds, making Greensill a key source of off-balance sheet financing. SoftBank has allocated $ 1.5 billion to Credit Suisse-Greensill funds to help keep them operational, the newspaper reported last week.
That money was set aside from the $ 1.5 billion investment the SoftBank Vision Fund made directly to Greensill in two parts in 2019.
Greensill used Credit Suisse funds to lend to other SoftBank Vision Fund companies. Credit Suisse’s funds totaled about $ 750 million in supply chain financing loans to Vision Vision companies at the end of March 2020, according to the fund’s documents sent to investors.
Among them was the automated financing company Fair Financial Corp .; Indian hotel chain Oyo Hotels & Homes; View glass manufacturer Inc.
; and the Chinese online vehicle trading platform Chehaoduo Group.
In essence, SoftBank was Greensill’s largest external sponsor, a lender through Credit Suisse funds and a borrower through its Vision Fund companies.
The multiple roles sparked a review within Credit Suisse that led to changes in the way the fund worked, the magazine reported last year. SoftBank changed its position in the funds in July last year, although lending to Vision Fund companies continued.
Another Greensill borrower from the Vision Fund was Katerra, a U.S.-based factory building contractor. In December, SoftBank allocated $ 200 million for the commissioning of the construction to help it avoid bankruptcy. Katerra chief executive told the newspaper that Greensill had also forgiven $ 435 million in funding in exchange for a roughly 5% stake in the company.
It was unclear how Greensill would absorb the loss of forgiving the loan.
One person said the $ 400 million injection of SoftBank into Greensill was made in the form of convertible debt. The money was intended to compensate for Katerra’s inability to return Greensill and would protect Credit Suisse investors from losing any banknotes tied to Katerra, some people familiar with the matter said.
Vision Fund executives have long talked about the potential benefits that can be gained from collaborating with their investee companies. The consequences of Greensill show that the reality has been more complicated.
Greensill’s collapse also highlights the risks of the Vision Fund’s big bets for unproven companies. He has had to write down the value of other challenging investments, including the owners of WeWork and Oyo Hotels offices.
Despite its setbacks, the technology investment giant has made several notable gains. In the last quarter of 2020, the Vision Fund recorded a profit of $ 13 billion in its investments. It is likely to earn multiples in its investment in South Korean e-commerce company Coupang Inc., which is expected to be made public soon at a valuation of more than $ 50 billion. DoorDash food delivery service Inc.,
which went public earlier this year, was also a success.
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